Correlation Between Bin Chuan and Holtek Semiconductor
Can any of the company-specific risk be diversified away by investing in both Bin Chuan and Holtek Semiconductor at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Bin Chuan and Holtek Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bin Chuan Enterprise and Holtek Semiconductor, you can compare the effects of market volatilities on Bin Chuan and Holtek Semiconductor and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Bin Chuan with a short position of Holtek Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bin Chuan and Holtek Semiconductor.
Diversification Opportunities for Bin Chuan and Holtek Semiconductor
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bin and Holtek is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Bin Chuan Enterprise and Holtek Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holtek Semiconductor and Bin Chuan is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Bin Chuan Enterprise are associated (or correlated) with Holtek Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holtek Semiconductor has no effect on the direction of Bin Chuan i.e., Bin Chuan and Holtek Semiconductor go up and down completely randomly.
Pair Corralation between Bin Chuan and Holtek Semiconductor
Assuming the 90 days trading horizon Bin Chuan Enterprise is expected to generate 2.08 times more return on investment than Holtek Semiconductor. However, Bin Chuan is 2.08 times more volatile than Holtek Semiconductor. It trades about 0.57 of its potential returns per unit of risk. Holtek Semiconductor is currently generating about -0.17 per unit of risk. If you would invest 3,930 in Bin Chuan Enterprise on September 4, 2024 and sell it today you would earn a total of 2,550 from holding Bin Chuan Enterprise or generate 64.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bin Chuan Enterprise vs. Holtek Semiconductor
Performance |
| Timeline |
| Bin Chuan Enterprise |
| Holtek Semiconductor |
Bin Chuan and Holtek Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bin Chuan and Holtek Semiconductor
The main advantage of trading using opposite Bin Chuan and Holtek Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bin Chuan position performs unexpectedly, Holtek Semiconductor can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Holtek Semiconductor will offset losses from the drop in Holtek Semiconductor's long position.| Bin Chuan vs. Holtek Semiconductor | Bin Chuan vs. Orient Semiconductor Electronics | Bin Chuan vs. Davicom Semiconductor | Bin Chuan vs. Taiwan Semiconductor Co |
| Holtek Semiconductor vs. Taiwan Semiconductor Manufacturing | Holtek Semiconductor vs. Yang Ming Marine | Holtek Semiconductor vs. AU Optronics | Holtek Semiconductor vs. Nan Ya Plastics |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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